J. Crew Q4 Profit Up on Double-Digit Sales Increase

J. Crew Spring 2012

New York—Lowered overhead costs and a double-digit increase in sales pushed J. Crew into an improved fourth quarter, the company said Monday.

For the quarter ended Jan. 28, J. Crew reported a profit of $15.1 million, compared with year-earlier profit of $4 million. The latest period included $25.1 million of net interest costs, compared with $528,000 a year earlier.

Total revenue rose 13% to $530.9 million. Comparable store sales rose 6% compared to flat in the year ago quarter. Store sales increased 16% to $354.0 million, with comparable store sales increasing 6% compared to a 5% decrease last year. Direct sales increased 10% to $170.8 million on top of increasing 12% in the fourth quarter last year.

J. Crew Investors to Target Abercrombie & Fitch Next?

J. Crew was taken private last year when private equity firms TPG Capital and Leonard Green & Partners LP, paid $3 billion to acquire the company.

The purchase, and cost tied to the buyout, has weighed on the company’s results in the last few quarter, even when its sales have become stronger.

Gross margin widened to 37.8% from 37.4%, while overhead costs declined slightly. Selling, general and administrative expenses decreased to $159.1 million from $160.7 million in the fourth quarter last year. Last year includes transaction costs of $20.0 million.

Inventories reached $242.7 million, compared with $214.4 million a year ago.

Meanwhile, reports surfaced this week that TPG Capital and Leonard Green are among the private equity firms interested in a leveraged buyout of Abercrombie & Fitch.

“Those are the kind of guys that typically play in the retail space,” reported Morningstar.

However, spokespeople for both companies declined comment on the speculation.

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